EXHIBIT 1
1,000,000 Units
STAR GAS PARTNERS, L.P.
Common Units
UNDERWRITING AGREEMENT
----------------------
August 18, 1999
PAINEWEBBER INCORPORATED
X.X. XXXXXXX & SONS, INC.
As Representatives of the
several Underwriters named in Schedule 1 hereto
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Star Gas Partners, L.P., a Delaware limited partnership (the
"Partnership"), proposes to sell an aggregate of 1,000,000 Common Units
representing limited partner interests in the Partnership (the "Firm Units"), to
you and the other underwriters named in Schedule 1 (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). If you are the only Underwriters named in Schedule 1, all
references herein to the Representatives shall be deemed to be to you as the
Underwriters. The Partnership has also agreed to grant to the several
Underwriters an option (the "Option") to purchase up to an aggregate of 150,000
additional common units (the "Option Units") on the terms and for the purposes
set forth in Section 1(b). The Firm Units and the Option Units are hereinafter
collectively referred to as the "Units."
The initial public offering price per Unit and the purchase price per Unit
to be paid by the several Underwriters shall be agreed upon by the Partnership
and the Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "Price Determination Agreement"). The Price
Determination Agreement may take the form of an exchange of any standard form of
written telecommunication among the Partnership and PaineWebber Incorporated
("PaineWebber") on behalf of the Representatives and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Units will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include, the Price Determination Agreement.
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Section 1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of
the Partnership herein contained and subject to all the terms and conditions of
this Agreement, the Partnership agrees to issue and sell to each Underwriter,
and each Underwriter, severally and not jointly, agrees to purchase from the
Partnership, at the purchase price per Firm Unit to be agreed upon by
PaineWebber on behalf of the Representatives and the Partnership in accordance
with Section 1(c) or 1(d) hereof and set forth in the Price Determination
Agreement, the number of Firm Units (subject to such adjustments to eliminate
fractional units as PaineWebber on behalf of the Representatives may determine)
which bears the same proportion to the total number of Firm Units to be sold by
the Partnership as the number of Firm Units set forth opposite the name of such
Underwriter in Schedule 1 bears to the total number of Firm Units, plus such
additional number of Firm Units which such Underwriter may become obligated to
purchase pursuant to Section 8 hereof. Schedule 1 may be attached to the Price
Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Partnership grants the Option to the Underwriters to purchase, severally and not
jointly, up to 150,000 Option Units from the Partnership at the same price per
Option Unit as the Underwriters shall pay for each of the Firm Units. The
Option may be exercised only to cover over-allotments in the sale of the Firm
Units by the Underwriters and may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of this
Agreement (or, if the Partnership has elected to rely on Rule 430A, on or before
the 30th day after the date of the Price Determination Agreement), upon written
or telegraphic notice (the "Option Units Notice") by PaineWebber on behalf of
the Representatives to the Partnership no later than 12:00 noon, New York City
time, at least two and no more than five business days before the date specified
for closing in the Option Units Notice (the "Option Closing Date") setting forth
the aggregate number of Option Units to be purchased and the time and date for
such purchase. On the Option Closing Date, the Partnership will sell to the
Underwriters the number of Option Units set forth in the Option Units Notice,
and each Underwriter will purchase such percentage of the Option Units as is
equal to the percentage of Firm Units that such Underwriter is purchasing, as
adjusted by PaineWebber on behalf of the Representatives in such manner as it
deems advisable to avoid fractional units.
(c) The initial public offering price per Firm Unit and the purchase
price per Firm Unit to be paid by the several Underwriters shall be agreed upon
and set forth in the Price Determination Agreement, if the Partnership has
elected to rely on Rule 430A. In the event such price has not been agreed upon
and the Price Determination Agreement has not been executed by the close of
business on the fourteenth business day following the date on which registration
statement (Registration No. 333-______) on Form S-3 becomes effective, this
Agreement shall terminate forthwith, without liability of any party to any other
party except that Section 6 shall remain in effect.
(d) If the Partnership has elected not to rely on Rule 430A, the
initial public offering price per Firm Unit and the purchase price per Firm Unit
to be paid by the several
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Underwriters shall be agreed upon and set forth in the Price Determination
Agreement, which shall be dated the date hereof, and an amendment to the
Registration Statements containing such per unit price information shall be
filed before the Registration Statements becomes effective.
Section 2. Delivery and Payment.
Delivery of the Firm Units shall be made to the several Underwriters for
their accounts at the office of PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, credit to the account of the Partnership
with the Depository Trust Company, against payment of the purchase price by wire
transfer of Federal Funds or similar same day funds to an account designated in
writing by the Partnership to PaineWebber at least one business day prior to the
Closing Date. Such payment shall be made at 10:00 a.m., New York City time, on
the third business day (or fourth business day, if the Price Determination
Agreement is executed after 4:30 p.m.) after the date on which the first bona
fide offering of the Units to the public is made by the Underwriters or at such
time on such other date, not later than ten business days after such date, as
may be agreed upon by the Partnership and PaineWebber on behalf of the
Representatives (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Units against
payment by the Underwriters (in the manner specified above) will take place at
the offices specified above for the Closing Date at the time and date (which may
be the Closing Date) specified in the Option Units Notice.
Certificates evidencing the Units shall be in definitive form and shall be
registered in such names and in such denominations as PaineWebber on behalf of
the Representatives shall request at least two business days prior to the
Closing Date or the Option Closing Date, as the case may be, by written notice
to the Partnership. For the purpose of expediting the checking and packaging of
certificates for the Units, the Partnership agrees to make such certificates to
be sold by the Partnership available for inspection at least 24 hours prior to
the Closing Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Units by the Partnership to the respective
Underwriters shall be borne by the Partnership. The Partnership will pay and
save each Underwriter and any subsequent holder of the Units harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying federal and state stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to such Underwriter of the Firm Units and Option Units.
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Section 3. Representations and Warranties.
The Partnership or Star Gas LLC, a Delaware limited liability company (the
"General Partner"), as applicable, represents, warrants and covenants to each
Underwriter that:
(a) The Partnership meets the requirements for use of Form S-3, and a
registration statement (Registration No. 333-47295) on Form S-3 relating to the
Firm Units and a registration statement (Registration No. 333- ) on
Form S-3, filed pursuant to Rule 462(b) of the Rules and Regulations (as defined
below), relating to the Option Units, and including any amendments to such
registration statements as may have been required to the date of this Agreement,
have been prepared by the Partnership under the provisions of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and have been filed with the
Commission. Registration statement (Registration No. 333-47295) on Form S-3
became effective on March 11, 1998 (the "First Effective Date"), and
registration statement (Registration No. 333-____________) on Form S-3 became
effective on August 18, 1999 (the "Second Effective Date," and with the First
Effective Date, the "Effective Dates"). Copies of such registration statements
have been delivered to the Representatives. The term "Registration Statements"
means the registration statements as amended at the Effective Dates, including
all financial statements and exhibits and all documents incorporated or deemed
incorporated therein by reference, as from time to time amended or supplemented
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Rule 430A and Rule 434 of the Rules and Regulations, or otherwise, and
any other registration statement filed under Rule 462 of the Rules and
Regulations as such registration statement may be amended from time to time.
The term "Prospectus" means the prospectus constituting a part of the
Registration Statements and any amendments or supplements to such prospectus,
including without limitation the prospectus supplement prepared in connection
with the proposed sale of Units contemplated by this Agreement (the "Prospectus
Supplement"), through the date of such Prospectus Supplement; provided, however,
that if any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Partnership for use in connection with the offering of the
Units that differs from the Prospectus or the Prospectus Supplement (whether or
not such revised prospectus or prospectus supplement is required to be filed by
the Partnership with the commission pursuant to Rule 424(b) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any reference herein to the
Registration Statements or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act, on or before the date hereof
or are so filed hereafter. Any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statements or the
Prospectus shall be deemed to refer to and include any such documents filed or
to be filed under the Exchange Act after the Effective Dates, or the date of the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
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(b) On the Effective Dates, the date the Prospectus was first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statements
becomes effective or any amendment or supplement to the Prospectus is filed with
the Commission, the Registration Statements and the Prospectus (as amended or as
supplemented), including the financial statements included or incorporated by
reference in the Prospectus, did or will comply with all applicable provisions
of the Act, the Exchange Act, the rules and regulations thereunder (the
"Exchange Act Rules and Regulations") and the Rules and Regulations and will
contain all statements required to be stated therein in accordance with the Act,
the Exchange Act, the Exchange Act Rules and Regulations and the Rules and
Regulations. On the Effective Dates and when any post-effective amendment to
the Registration Statements becomes effective, no part of the Registration
Statements or any such amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. At the
Effective Dates, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on and
in conformity with information relating to any Underwriter furnished in writing
to the Partnership by the Representatives specifically for inclusion in the
Registration Statements or Prospectus or any amendment or supplement thereto.
For all purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus Supplement constitute the only
information relating to any Underwriter furnished in writing to the Partnership
by the Representatives specifically for inclusion in the Registration Statements
or the Prospectus. The Partnership has not distributed any offering material in
connection with the offering or sale of the Units other than the Registration
Statements, the Prospectus or any other materials, if any, permitted by the Act.
(c) The documents which are incorporated by reference in the
Prospectus or from which information is so incorporated by reference, when they
become effective or were filed with the Commission, as the case may be, complied
in all material respects with the requirement of the Act or the Exchange Act, as
applicable, the Exchange Act Rules and Regulations and the Rules and
Regulations; and any document so filed and incorporated by reference subsequent
to the Effective Dates shall, when they are filed with the Commission, conform
in all material respects with the requirements of the Act and the Exchange Act,
as applicable, the Exchange Act Rules and Regulations and the Rules and
Regulations.
(d) The Partnership and each of its direct or indirect subsidiaries
listed on Exhibit B hereto (the "Subsidiaries" and together with the Partnership
and the General Partner, the "Star Entities"), have been duly formed and are
validly existing and in good standing, as limited partnerships under the
Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") (or, in
the case of certain of the Subsidiaries, a corporation duly organized, validly
existing and in
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good standing under the laws of its jurisdiction of incorporation), with all
necessary partnership power (or, in the case of certain of the Subsidiaries,
corporate power) and authority to own or lease their properties and conduct
their business, in each case as described in the Prospectus, and are duly
qualified or registered as foreign limited partnerships (or, in the case of
certain of the Subsidiaries, a foreign corporation) for the transaction of
business under the laws of each jurisdiction in which the character of the
business conducted by them or the location of the properties owned or leased by
them make such qualification or registration necessary (except where the failure
to so qualify or register would not have a material adverse effect on the
condition (financial or other), results of operations or business of the Star
Entities, taken as a whole, or to subject the Partnership or the limited
partners of the Partnership to any material liability or disability).
(e) All of the outstanding shares of capital stock or other capital
interests of the Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable and are owned by the Partnership free and
clear of all liens, encumbrances and claims except for liens, encumbrances or
claims against Star Gas Propane, L.P. (the "Operating Partnership"), a Delaware
limited partnership, a 99.99% limited partner interest of which is owned by the
Partnership and a 0.01% general partner interest of which is owned by the
General Partner, as described in the Registration Statements. Except for the
units or stock of the Subsidiaries and as disclosed in the Registration
Statements, the Partnership does not own, and at the Closing Date will not own,
directly or indirectly, any units or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the certificate of incorporation and of the by-laws or, if applicable,
partnership agreements of the Partnership and each of its Subsidiaries and all
amendments thereto have been delivered to the Representatives, and no changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date.
(f) The General Partner has been duly organized and is validly
existing in good standing as a limited liability company under the laws of the
State of Delaware. The General Partner has all necessary power and authority to
own or lease its properties and conduct its business and to act as general
partner of the Partnership and the Operating Partnership, in each case as
described in the Registration Statements, and the General Partner is duly
qualified or registered as a foreign entity for the transaction of business and
is in good standing under the laws of each jurisdiction in which the character
of the business conducted by it or the location of the properties owned or
leased by it make such qualification or registration necessary (except where the
failure to so qualify or register would not have a material adverse effect on
the condition (financial or other), results of operations or business of the
General Partner, or subject the General Partner, the Partnership or the limited
partners of the Partnership to any material liability or disability).
(g) The General Partner is the sole general partner of the Partnership
with a 1.99% general partner interest in the Partnership; such general partner
interest has been duly authorized by the Partnership Agreement, as amended
through the Closing Date, and is validly issued to the General Partner; and the
General Partner owns such general partner interest free and clear of all liens,
encumbrances, security interests, equities, charges or claims (except for such
liens,
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encumbrances, security interests, equities, charges or claims as are not,
individually or in the aggregate, material) other than those created by or
arising under the Delaware Act, the Operating Partnership's bank credit
facilities (the "Bank Credit Facilities") or the First Mortgage Note Agreement
between the General Partner and various institutional investors (the "First
Mortgage Note Agreement").
The Partnership owns its limited partner interest in the Operating
Partnership free and clear of all liens, encumbrances, security interests,
equities, charges or claims (except for such liens, encumbrances, security
interests, equities, charges or claims as are not, individually or in the
aggregate, material) other than those created by or arising under the Delaware
Act, the Bank Credit Facilities or the First Mortgage Note Agreement.
(h) The General Partner is the sole general partner of the Operating
Partnership with a 0.01% general partner interest in the Operating Partnership;
such general partner interest has been duly authorized by the Agreement of
Limited Partnership of the Operating Partnership as amended through the Closing
Date (the "Operating Partnership Agreement" and, together with the Partnership
Agreement, the "Partnership Agreements") and has been validly issued to the
General Partner; and the General Partner owns such general partner interest free
and clear of all liens, encumbrances, security interests, equities, charges or
claims (except for such liens, encumbrances, security interests, equities,
charges or claims as are not, individually or in the aggregate, material) other
than those created by or arising under the Delaware Act, the Bank Credit
Facilities or the First Mortgage Note Agreement.
(i) All of the issued and outstanding member interests of the General
Partner are duly authorized and have been validly issued, and are fully paid and
nonassessable, and Xxxx X. Xxxxx, Xxxxxx X. Xxxxx, Hanseatic Corp. and Hanseatic
Americas LDC own all such outstanding membership interests of the General
Partner free and clear of all liens, encumbrances, security interests, equities,
charges or claims (except for such liens, encumbrances, security interests,
equities, charges or claims as are not, individually or in the aggregate,
material).
(j) The outstanding Common Units have been, and the Units to be issued
and sold by the Partnership under this Agreement upon such issuance will be,
duly authorized, validly issued, fully paid and nonassessable and will not be
subject to any preemptive or similar right. The description of the Common Units
in the Registration Statements and the Prospectus is, and at the Closing Date
will be, complete and accurate in all respects. Except as set forth in the
Prospectus, the Partnership does not have outstanding, and at the Closing Date
will not have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any Common Units or other partnership
interests, any capital stock or partnership interests of any Subsidiary or any
such warrants, convertible securities or obligations.
(k) The financial statements and schedules included or incorporated by
reference in the Registration Statements or the Prospectus present fairly the
consolidated financial condition
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of the Partnership and Petroleum Heat and Power Co., Inc. ("Petro") as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Partnership and Petro for the respective periods covered thereby,
all in conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The pro forma financial statements and other pro
forma financial information included in the Registration Statements or the
Prospectus (i) present fairly in all material respects the information shown
therein, (ii) have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and (iii) have been
properly computed on the bases described therein. The assumptions used in the
preparation of the pro forma financial statements and other pro forma financial
information included in the Registration Statements or the Prospectus are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein. No other financial
statements or schedules of the Partnership are required by the Act, the Exchange
Act, the Exchange Act Rules and Regulations or the Rules and Regulations to be
included in the Registration Statements or the Prospectus. KPMG LLP (the
"Accountants"), who have reported on such financial statements and schedules,
are independent accountants with respect to each of the Star Entities as
required by the Act and the Rules and Regulations. The statements included in
the Registration Statements with respect to the Accountants pursuant to Rule 509
of Regulation S-K of the Rules and Regulations are true and correct in all
material respects.
(l) Each of the Star Entities maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(m) Subsequent to the respective dates as of which information is
given in the Registration Statements and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statements and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of any of the Star Entities, or in the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of any of the Star Entities, arising for any reason whatsoever, (ii) none of the
Star Entities has incurred nor will it incur any material liabilities or
obligations, direct or contingent, except liabilities incurred in the ordinary
course of business and consistent with past practices, nor has it entered into
nor will it enter into any material transactions other than pursuant to this
Agreement and the transactions referred to herein and (iii) the Partnership has
not and will not have paid or declared any dividends or other distributions of
any kind on any class of its capital units.
(n) None of the Star Entities is, or as of the Closing Date will be,
(i) a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" thereof, within the
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meaning of the Public Utility Holding Company Act of 1935, as amended, or (ii)
an "investment company," a company "controlled by" an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(o) Except as set forth in the Registration Statements and the
Prospectus, there are no actions, suits or proceedings pending, or to the
knowledge of the Star Entities, threatened against or affecting any of the Star
Entities or any of their respective directors or officers in their capacity as
such, before or by any federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might materially and adversely affect
any of the Star Entities or their business, properties, business prospects,
condition (financial or otherwise) or results of operations.
(p) Each of the Star Entities has, and at the Closing Date will have,
(i) all governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its business as contemplated in the
Prospectus, (ii) complied in all respects with all laws, regulations and orders
applicable to it or its business, except where the failure to so comply would
not have a material adverse affect on the Star Entities, taken as a whole, and
(iii) performed all its obligations required to be performed by it, and is not,
and at the Closing Date will not be, in default, under any indenture, mortgage,
deed of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its property
is bound or affected. To the best knowledge of the Partnership and each of its
Subsidiaries, no other party under any contract or other agreement to which it
is a party is in default in any material respect thereunder. None of the Star
Entities is, nor at the Closing Date will any of them be, in violation of any
provision of its Partnership Agreement or certificate of incorporation or by-
laws, as the case may be.
(q) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Units by the Partnership, in connection with the execution, delivery and
performance of this Agreement and the Price Determination Agreement by the
Partnership, in connection with the execution, delivery and performance of the
Merger Agreement by the Partnership or in connection with the taking by the
Partnership of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Units.
(r) The Partnership has full power and authority to enter into this
Agreement. This Agreement has been duly authorized, executed and delivered by
the Partnership and constitutes a valid and binding agreement of the Partnership
and is enforceable against the Partnership in accordance with the terms hereof;
provided that the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, or similar laws
relating
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to or affecting creditors' rights generally and by general equitable principals
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The performance of this Agreement, the consummation of the
transactions contemplated hereby and the application of the net proceeds from
the offering and sale of the Units in the manner set forth in the Prospectus and
the Prospectus Supplement under "Use of Proceeds" will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of the Partnership or any of its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, the Partnership Agreement of the Partnership or certificate of
incorporation, by-laws or partnership agreement, as the case may be, of any of
its Subsidiaries, any contract or other agreement to which the Partnership any
of its subsidiaries is a party or by which the Partnership or any of its
Subsidiaries or Petro or any of its subsidiaries or any of their respective
properties is bound or affected, or violate or conflict with any judgment,
ruling, decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or properties of the
Partnership or any of its Subsidiaries.
(s) The Partnership Agreement, as amended as of the Closing Date, is
duly authorized, executed and delivered by the General Partner and is a valid
and legally binding agreement of the General Partner, enforceable against the
General Partner in accordance with its terms; the Operating Partnership
Agreement, as amended as of the Closing Date, is duly authorized executed and
delivered by the General Partner and is a valid and legally binding agreement of
the General Partner, enforceable against the General Partner in accordance with
its terms; provided that, with respect to both agreements described in this
paragraph (y), the enforceability thereof may by limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, or similar laws
relating to or affecting creditors' right generally and by general equitable
principals (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(t) Each of the Star Entities has good and marketable title to all
properties and assets described in the Prospectus as owned by it, free and clear
of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the business of the
Partnership or its Subsidiaries. Each of the Star Entities has valid, subsisting
and enforceable leases for the properties described in the Prospectus as leased
by it, with such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by the Partnership
and such Subsidiaries.
(u) There is no document or contract of a character required to be
described in the Registration Statements or the Prospectus or to be filed as an
exhibit to the Registration Statements which is not described or filed as
required. All such contracts to which the Partnership or any Subsidiary is a
party have been duly authorized, executed and delivered by the Partnership or
such Subsidiary, constitute valid and binding agreements of the Partnership or
such Subsidiary and are enforceable against the Partnership or such Subsidiary
in accordance with the terms thereof.
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(v) No statement, representation, warranty or covenant made by the
Partnership in this Agreement or made in any certificate or document required by
this "greement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(w) Neither the Star Entities nor the directors, officers or
controlling persons of any such entity have taken, directly or indirectly, any
action intended, or which might reasonably be expected, to cause or result,
under the Act or otherwise, in, or which has constituted, stabilization or
manipulation of the price of any security of the Partnership to facilitate the
sale or resale of the Units.
(x) Except as disclosed on Schedule 2 hereto, no person or entity has
the right to require the registration under the Act of Common Units or other
securities of any Star Entity by reason of the filing or effectiveness of the
Registration Statements.
(y) The Units have been approved for listing on the New York Stock
Exchange ("NYSE"), subject only to official notice of issuance.
(z) The Star Entities are in compliance in all material respects with
all federal, state and local employment and labor laws, including, but not
limited to, laws relating to non-discrimination in hiring, promotion and pay of
employees; no labor dispute with the employees of such entities exists or, to
the knowledge of the Partnership, is imminent or threatened; and the Partnership
is not aware of any existing, imminent or threatened labor disturbance by the
employees of any principal suppliers, manufacturers or contractors of the Star
Entities that could result in a material adverse effect on the condition
(financial or otherwise) or on the earnings, business, properties, business
prospects or operations of the Partnership and its Subsidiaries, taken as a
whole.
(aa) The Star Entities own, or are licensed or otherwise have the full
exclusive right to use or will be licensed or otherwise will have full exclusive
right to use, the material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, services marks and trade names (collectively, "patent and
proprietary rights") presently employed by them or which are necessary in
connection with the conduct of the business now operated by them as set forth in
the Registration Statements and the Prospectus and none of the Star Entities
have received any written notice or otherwise have actual knowledge of any
infringement of or conflict with asserted rights of others or any other claims
with respect to any patent or proprietary rights, or of any basis for rendering
any patent and proprietary rights invalid or inadequate to protect the interest
of such Star Entity.
(bb) None of the Star Entities, nor, to the Partnership's knowledge,
any employee or agent of such Star Entity has made any payment of funds of the
Star Entity or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus.
11
(cc) The Partnership has complied, and until the completion of the
distribution of the Units will comply, with all of the provisions of (including,
without limitation, filing all forms required by) Section 517.075 of the Florida
Securities and Investor Protection Act and Regulation 3E-900.001 issued
thereunder with respect to the offering and sale of the Units.
(dd) The Star Entities (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or imposing liability
or standards of conduct concerning any Hazardous Material (as hereinafter
defined) ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in the
aggregate result in a material adverse effect on the condition (financial or
otherwise) or on the earnings, business, properties, business prospects or
operations of the Partnership and its Subsidiaries, taken as a whole. The term
"Hazardous Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (B) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(ee) Each of the Star Entities maintains insurance with respect to its
properties and business of the types and in amounts generally deemed adequate
for its business and consistent with insurance coverage maintained by similar
companies and businesses, all of which insurance is in full force and effect.
(ff) Each of the Star Entities has filed all material federal, state
and foreign income and franchise tax returns and has paid all taxes shown as due
thereon, other than taxes which are being contested in good faith and for which
adequate reserves have been established in accordance with GAAP; and none of the
Star Entities has knowledge of any tax deficiency which has been or might be
asserted or threatened against any such entity. There are no tax returns of any
Star Entity that are currently being audited by state, local or federal taxing
authorities or agencies (and with respect to which any such entity has received
notice), where the findings of such audit, if adversely determined, would result
in a material adverse effect on the condition (financial or otherwise) or on the
earnings, business, properties, business prospects or operations of the
Partnership and its Subsidiaries, taken as a whole.
(gg) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by any Star Entity, or with
respect to which any Star Entity could incur any liability
12
under ERISA (collectively, the "Benefit Plans"), no event has occurred and, to
the best knowledge of any of the Star Entities, there exists no condition or set
of circumstances, in connection with which any such entity could be subject to
any liability under the terms of such Benefit Plan, applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended) or
any applicable agreement that could materially adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Star Entities, taken as a whole.
Section 4. Agreements of the Partnership.
The Partnership agrees with the Underwriters as follows:
(a) The Partnership will not, either prior to the Second Effective
Date or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Units by an Underwriter or dealer,
file any amendment or supplement to the Registration Statements or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Partnership will notify the Representatives promptly, and will
confirm such notice in writing, (1) of any request by the Commission for
amendments or supplements to the Registration Statements or the Prospectus or
for additional information, (2) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statements or the
initiation of any proceedings for that purpose or the threat thereof, (3) of the
happening of any event during the period mentioned in the second sentence of
Section 4(e) that in the judgment of the Partnership makes any statement made in
the Registration Statements or the Prospectus untrue or that requires the making
of any changes in the Registration Statements or the Prospectus in order to make
the statements therein, in light of the circumstances in which they are made,
not misleading and (4) of receipt by the Partnership or any representative or
attorney of the Partnership of any other communication from the Commission
relating to the Partnership, the Registration Statements or the Prospectus. If
at any time the Commission shall issue any order suspending the effectiveness of
the Registration Statements, the Partnership will make every reasonable effort
to obtain the withdrawal of such order at the earliest possible moment. The
Partnership will use its best efforts to comply with the provisions of and make
all requisite filings with the Commission pursuant to Rule 430A and to notify
the Representatives promptly of all such filings.
(c) The Partnership will furnish to the Representatives, without
charge, two signed copies of each of the Registration Statements and of any
post-effective amendments thereto, including financial statements and schedules,
and all exhibits thereto (including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus), and will
furnish to the Representatives, without charge, for transmittal to each of the
other Underwriters, a copy of each of the Registration Statements and any post-
effective amendments thereto, including financial statements and schedules but
without exhibits.
13
(d) The Partnership will comply with all the provisions of any
undertakings contained in the Registration Statements.
(e) On the Second Effective Date, and thereafter from time to time,
the Partnership will deliver to each of the Underwriters, without charge, as
many copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Partnership consents to the use of
the Prospectus or any amendment or supplement thereto by the Underwriters and by
all dealers to whom the Units may be sold, both in connection with the offering
or sale of the Units and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection therewith. If
during such period of time any event shall occur which in the judgment of the
Partnership or counsel to the Underwriters should be set forth in the Prospectus
in order to make any statement therein, in the light of the circumstances under
which it was made, not misleading, or if it is necessary to supplement or amend
the Prospectus to comply with law, the Partnership will forthwith prepare and
duly file with the Commission an appropriate supplement or amendment thereto,
and will deliver to each of the Underwriters, without charge, such number of
copies thereof as the Representatives may reasonably request. The Partnership
shall not file any document under the Exchange Act before the termination of the
offering of the Units by the Underwriters if such document would be deemed to be
incorporated by reference into the Prospectus which is not approved by
PaineWebber after reasonable notice thereof.
(f) Prior to any public offering of the Units by the Underwriters, the
Partnership will cooperate with the Representatives and counsel to the
Underwriters in connection with the registration or qualification of the Units
for offer and sale under the securities or Blue Sky laws of such jurisdictions
as the Representatives may request; provided, that in no event shall the
Partnership be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Second Effective
Date, the Partnership will furnish to the Representatives copies of such
financial statements and other periodic and special reports as the Partnership
may from time to time distribute generally to the holders of any class of its
capital units, and will furnish to the Representatives copies of each annual or
other report it shall be required to file with the Commission.
(h) The Partnership will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Second Effective Date falls, an earnings statement (which need not be audited
but shall be in reasonable detail) for a period of 12 months ended commencing
after the Second Effective Date, and satisfying the provisions of Section 11(a)
of the Act (including Rule 158 of the Rules and Regulations).
14
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Partnership will pay, or
reimburse if paid by the Representatives, all costs and expenses incident to the
performance of the obligations of the Partnership under this Agreement,
including but not limited to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration Statements and exhibits to
it, the Prospectus and any amendment or supplement to the Registration
Statements or the Prospectus, (2) the preparation and delivery of certificates
representing the Units, (3) the word processing, printing and reproduction of
this Agreement, the Agreement Among Underwriters, any Dealer Agreements and any
Underwriters' Questionnaire, (4) furnishing (including costs of shipping,
mailing and courier) such copies of the Registration Statements and the
Prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Units by the Underwriters or
by dealers to whom Units may be sold, (5) the listing of the Units on the NYSE,
(6) any filings required to be made by the Underwriters with the NASD, and the
fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (7) the registration or qualification of the Units for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (8) counsel to the Partnership, (9) the transfer agent for the Units
and (10) the Accountants.
(j) If this Agreement shall be terminated by the Partnership pursuant
to any of the provisions hereof (otherwise than pursuant to Section 8) or if for
any reason the Partnership shall be unable to perform its obligations hereunder,
the Partnership will reimburse the Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith.
(k) The Partnership will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the units of Common
Units to facilitate the sale or resale of any of the Units.
(l) The Partnership will apply the net proceeds from the offering and
sale of the Units to be sold by the Partnership in the manner set forth in the
Prospectus and the Prospectus Supplement under "Use of Proceeds."
(m) During the period of 120 days commencing at the Closing Date, the
Partnership and the General Partner will not, without the prior written consent
of PaineWebber, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Common Units or securities
convertible into Common Units, other than to the Underwriters pursuant to this
Agreement and other than pursuant to employee benefit plans as in existence as
of the Date hereof, provided, that the Partnership will not grant options to
purchase Common Units pursuant to such employee benefit plans at a price less
than the public offering price.
15
(n) The Partnership will not, and will cause each of its affiliates,
and certain executive officers, directors and controlling persons to enter into
agreements with the Representatives in the form set forth in Exhibit C to the
effect that they will not, for a period of 120 days after the commencement of
the public offering of the Units (the "Lock-up Period"), without the prior
written consent of PaineWebber, directly or indirectly, offer, pledge, sell,
contract to sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of any Common Units or rights to acquire Common Units or any
security convertible into or exercisable or exchangeable for Common Units
(including, without limitation, Common Units which may be deemed to be
beneficially owned in accordance with the rules and regulations of the
Commission) other than in the case of the Partnership the Option Units (other
than (i) pursuant to employee stock option plans as in existence as of the date
hereof or in connection with other employee incentive compensation arrangements
consistent with past practice, or (ii) pursuant to or in connection with an
acquisition by the Partnership provided that any person receiving such Common
Units in the acquisition will also enter into an agreement with the Underwriters
in substantially the same form set forth in Exhibit C, in which such person will
agree not to sell, contract to sell or otherwise dispose of any Common Units or
rights to acquire such units for the remainder of the Lock-up Period).
Section 5. Conditions of the Obligations of the Underwriters.
In addition to the execution and delivery of the Price Determination
Agreement, the obligations of each Underwriter hereunder are subject to the
following conditions:
(a) Notification that registration statement (Registration No. 333-
_________) on Form S-3 has become effective shall be received by PaineWebber not
later than 5:00 p.m., New York City time, on the date of this Agreement or at
such later date and time as shall be consented to in writing by PaineWebber and
all filings required by Rule 424 of the Rules and Regulations and Rule 430A
shall have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statements shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statements or the qualification or
registration of the Units under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statements or the Prospectus shall have been filed unless a
copy thereof was first submitted to PaineWebber and PaineWebber did not object
thereto in good faith, and PaineWebber shall have received certificates, dated
the Closing Date and the Option Closing Date and signed by the Chief Executive
Officer or the Chairman of the Board of Directors of the General Partner and the
Vice President of Finance of
16
the General Partner (who may, as to proceedings threatened, rely upon the best
of their information and belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given in the
Registration Statements and the Prospectus, (i) there shall not have been, and
no development shall have occurred which could reasonably be expected to result
in, a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise) or results
of operations of the Partnership and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, in each
case other than as set forth in or contemplated by the Registration Statements
and the Prospectus and (ii) neither the Partnership nor any of its Subsidiaries
shall have sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statements and the Prospectus, if in the judgment of PaineWebber any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Units by the Underwriters at the public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statements and the Prospectus, there shall have been no litigation
or other proceeding instituted against the General Partner, the Partnership or
any of its Subsidiaries or any of their respective officers or directors in
their capacities as such, before or by any federal, state or local court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, in which litigation or proceeding an unfavorable ruling,
decision or finding would materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Partnership and its Subsidiaries taken as a whole.
(e) Each of the representations and warranties of the Partnership
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Units, at the Option Closing Date,
as if made at the Closing Date and, with respect to the Option Units, at the
Option Closing Date, and all covenants and agreements herein contained to be
performed on the part of the Partnership and all conditions herein contained to
be fulfilled or complied with by the Partnership at or prior to the Closing Date
and, with respect to the Option Units, at or prior to the Option Closing Date,
shall have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Units, the Option Closing Date,
satisfactory in form and substance to counsel for the Underwriters, from
Xxxxxxxx Xxxxx Xxxxxxxx Xxxx & Ballon LLP, counsel to the Partnership, to the
effect set forth in Exhibit D (to the extent such opinions are not covered by
the opinion received pursuant to Section 5(g) hereof).
(g) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Units, the Option Closing Date,
satisfactory in form and substance
17
to counsel for the Underwriters, from Xxxxxxx & Xxxxx LLP, counsel to the
Partnership, to the effect set forth in Exhibit D (to the extent such opinions
are not covered by the opinion received pursuant to Section 5(f) hereof).
(h) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Xxxxx & Xxxxx, L.L.P., counsel to
the Underwriters, with respect to the Registration Statements, the Prospectus
and this Agreement, which opinion shall be satisfactory in all respects to the
Representatives.
(i) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Partnership as required by the Act and the Rules and Regulations and with
respect to the financial and other statistical and numerical information
contained in the Registration Statements or incorporated by reference therein.
At the Closing Date and, as to the Option Units, the Option Closing Date, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, which shall confirm, on the basis of a review in accordance
with the procedures set forth in the letter from the Accountants, that nothing
has come to their attention during the period from the date of the letter
referred to in the prior sentence to a Date (specified in the letter) not more
than five days prior to the Closing Date and the Option Closing Date which would
require any change in their letter dated the date of the Prospectus, if it were
required to be dated and delivered at the Closing Date and the Option Closing
Date.
(j) On or prior to the Closing Date, the Representatives shall have
received the executed agreements referred to in Section 4(n).
(k) At the Closing Date and, as to the Option Units, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the General Partner, in
form and substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statements and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus) and (A) as of the date of such certificate, such documents are
true and correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not untrue or misleading and (B) since the Second
Effective Date, no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading in any material respect and there has been
no document required to be filed under the Exchange Act and the Exchange
Act Rules and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so filed;
18
(ii) Each of the representations and warranties of the
Partnership contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in all
material respects;
(iii) Each of the covenants required herein to be performed by
the Partnership on or prior to the delivery of such certificate has been
duly, timely and fully performed and each condition herein required to be
complied with by the Partnership on or prior to the date of such
certificate has been duly, timely and fully complied with; and
(iv) Since the respective dates as of which information is given
in the Registration Statements and the Prospectus, (A) there has not been,
and no development has occurred which could reasonably be expected to
result in, a material adverse change in the general affairs, business,
business prospects, properties, management, condition (financial or
otherwise) or results of operations of the Partnership and its Subsidiaries
taken as a whole, whether or not arising from transactions in the ordinary
course of business, in each case other than as set forth in or contemplated
by the Registration Statements and the Prospectus and (B) neither the
Partnership nor any of its Subsidiaries has sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Registration Statements and the
Prospectus;
and such other matters as the Representatives may reasonably request.
(l) The Units shall be qualified for sale in such states as the
Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(m) Prior to the Closing Date, the Units shall have been duly
authorized for listing on NYSE upon official notice of issuance.
(n) The NASD shall have approved the underwriting terms and
arrangements and such approval shall not have been withdrawn or limited.
(o) The Partnership shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any statement in
the Registration Statements or the Prospectus or any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, as
to the accuracy at the Closing Date and the Option Closing Date of the
representations and warranties of the Partnership herein, as to the performance
by the Partnership of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
19
Section 6. Indemnification.
(a) The Partnership, the General Partner, the Operating Partnership
and Star/Petro Inc., a Minnesota corporation, will, jointly and severally,
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person, if any, who controls each
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, liabilities, expenses
and damages (collectively, "Liabilities") (including, but not limited to, any
and all investigative, legal and other expenses reasonably incurred in
connection with, and any and all amounts paid in settlement of, any action, suit
or proceeding between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or otherwise, or
any claim asserted), as and when incurred, to which any Underwriter, or any such
person, may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statements or the Prospectus or any amendment or
supplement to the Registration Statements or the Prospectus or in any documents
filed under the Exchange "ct and deemed to be incorporated by reference into the
Prospectus, or in any application or other document executed by or on behalf of
the Partnership or based on written information furnished by or on behalf of the
Partnership filed in any jurisdiction in order to qualify the Units under the
securities laws thereof or filed with the Commission, (ii) the omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading or (iii) any act
or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Units or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Partnership shall not be
liable under this clause (iii) to the extent it is finally judicially determined
by a court of competent jurisdiction that such loss, claim, liability, expense
or damage resulted primarily and directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct); provided that the Partnership will not be
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Units in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Partnership by the
Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statements or the Prospectus. This indemnity agreement will be in
addition to any liability that the Partnership might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Partnership,
each person, if any, who controls the Partnership within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, each director of the General
Partner and each officer of the General Partner who signs the Registration
Statements to the same extent as the foregoing indemnity from the Partnership to
each Underwriter, but only insofar as Liabilities arise out of or are based on
any
20
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Partnership by the Representatives on behalf of such
Underwriter expressly for use in the Registration Statements or the Prospectus.
This indemnity will be in addition to any liability that each Underwriter might
otherwise have; provided, however, that in no case shall any Underwriter be
liable or responsible for any amount in excess of the underwriting discounts and
commissions received by such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 6 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 6, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 6 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in
21
any pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 6 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 6(c), if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Partnership or the Underwriters,
the Partnership and the Underwriters will contribute to the total Liabilities
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Partnership from persons other than the Underwriters, such as persons who
control the Partnership within the meaning of the Act, officers of the General
Partner who signed the Registration Statements and directors of the General
Partner, who also may be liable for contribution) to which the Partnership and
any one or more of the Underwriters may be subject in such proportion as shall
be appropriate to reflect the relative benefits received by the Partnership on
the one hand and the Underwriters on the other. The relative benefits received
by the Partnership on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Partnership bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Partnership, on the one
hand, and the Underwriters, on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Partnership, or the Representatives on behalf of
the Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Partnership and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an
22
indemnified party as a result of the Liabilities, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to include, for purpose
of this Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(d), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions received by it and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(d), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each officer of the
General Partner who signed the Registration Statements will have the same rights
to contribution as the Partnership, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 6(d), will notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 6(d). Except for a
settlement entered into pursuant to the last sentence of Section 6(d) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Partnership contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of the Units and payment therefore or (iii) any termination of this Agreement.
(f) The Partnership hereby irrevocably consents and agrees, for the
benefit of each Underwriter and each person who controls any Underwriter, that
any action, suit or proceeding asserting a claim for indemnification or
contribution under or pursuant to this Section 6 may be instituted by any
Underwriter or any such controlling person in any state or federal court in the
Borough of Manhattan in the City of New York, and the Partnership will accept
the jurisdiction of such court in such action, and waives, to the fullest extent
permitted by applicable law, any defense based upon lack of personal
jurisdiction or venue.
Section 7. Termination.
The obligations of the Underwriters under this Agreement may be terminated
at any time on or prior to the Closing Date (or, with respect to the Option
Units, on or prior to the Option Closing Date), by notice to the Partnership
from the Representatives, without liability on the part of any Underwriter to
the Partnership, if, prior to delivery and payment for the Units (or the Option
Units, as the case may be), in the sole judgment of the Representatives, (i)
there has been, since the respective dates as of which information is given in
the Registration Statements or the Prospectus,
23
any material adverse change in the Partnership's business, properties, business
prospects, condition (financial or otherwise) or results of operations, (ii)
trading in any of the equity securities of the Partnership shall have been
suspended by the Commission, the NASD, an exchange that lists the Units or the
NYSE, (iii) trading in securities generally on the NYSE or the Nasdaq Stock
Market shall have been suspended or limited or minimum or maximum prices shall
have been generally established on such exchange or over the counter market, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or the NASD or any court or other
governmental authority, (iv) a general banking moratorium shall have been
declared by either federal or New York State authorities or (v) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred the
effect of any of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to market the Units on the terms
and in the manner contemplated by the Prospectus.
Section 8. Substitution of Underwriter.
If one of the Underwriters shall fail or refuse to purchase any of the Firm
Units which it has agreed to purchase hereunder, and the aggregate number of
Firm Units which such defaulting Underwriter agreed but failed or refused to
purchase is not more than one-tenth of the aggregate number of Firm Units, the
other Underwriter shall be obligated to purchase the Firm Units which such
defaulting Underwriter agreed but failed or refused to purchase, in the
proportion which the number of Firm Units which it has respectively agreed to
purchase pursuant to Section 1 bears to the aggregate number of Firm Units which
such non-defaulting Underwriter has so agreed to purchase, or in such other
proportion as the Representatives may specify; provided that in no event shall
the maximum number of Firm Units which any Underwriter has become obligated to
purchase pursuant to Section 1 be increased pursuant to this Section 8 by more
than one-ninth of the number of Firm Units agreed to be purchased by such
Underwriter without the prior written consent of such Underwriter. If any
Underwriter shall fail or refuse to purchase any Firm Units and the aggregate
number of Firm Units which such defaulting Underwriter agreed but failed or
refused to purchase exceeds one-tenth of the aggregate number of Firm Units and
arrangements satisfactory to the Representatives and the Partnership for the
purchase of such Firm Units are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of the non-
defaulting Underwriter and the Partnership for the purchase or sale of any Units
under this "Agreement. In any such case either the Representatives or the
Partnership shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statements and in the Prospectus or in any other documents or
arrangements may be effected. "Any action taken pursuant to this Section 8 shall
not relieve the defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
24
Section 9. Information Furnished by the Underwriters.
The statements related to concessions and reallowances and the paragraph
related to stabilization, syndicate covering transactions and penalty bids under
the caption "Underwriting" in the Prospectus Supplement constitute the only
information furnished by or on behalf of the Underwriters relating to them
through you as such information is referred to in Sections 3(b) and 6 hereof.
Section 10. Miscellaneous.
Notice given pursuant to any of the provisions of this Agreement shall be
in writing and, unless otherwise specified, shall be mailed or delivered (a) if
to the Partnership, at the office of the Partnership, 0000 Xxxxxxxx Xxxxxx, X.X.
Xxx 000000, Xxxxxxxx, XX 00000-0000, Attention: Xxxxxxx Xxxxxx, or (b) if to the
Representatives, at the offices of PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department.
Any such notice shall be effective only upon receipt. Any notice under Section
7 or 8 may be made by telex or telephone, but if so made shall be subsequently
confirmed in writing.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Partnership and of the controlling persons, directors and
officers referred to in Section 6, and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Units from any of the
Underwriters.
All representations, warranties and agreements of the Partnership and the
General Partner contained herein or in certificates or other instruments
delivered pursuant hereto, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
of its controlling persons and shall survive delivery of and payment for the
Units hereunder.
Any action required or permitted to be taken by the Representatives under
this Agreement may be taken by them jointly or by PaineWebber.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
25
The Partnership and the Underwriters each hereby irrevocably waive any
right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any provision
hereof waived except by an instrument in writing signed by PaineWebber and the
Partnership.
[SIGNATURE PAGES TO FOLLOW]
26
Please confirm that the foregoing correctly sets forth the agreement among
the Partnership and the several Underwriters.
Very truly yours,
STAR GAS PARTNERS, L.P.
By: STAR GAS LLC, as General Partner
By: _____________________________________________
Name:
Title:
STAR GAS PROPANE, L.P.
By: STAR GAS LLC, as General Partner
By: _____________________________________________
Name:
Title:
STAR GAS LLC
By: _____________________________________________
Name:
Title:
STAR/PETRO INC.
By: _____________________________________________
Name:
Title:
[SIGNATURE PAGES TO UNDERWRITING AGREEMENT]
Confirmed as of the Date first above mentioned:
PAINEWEBBER INCORPORATED
X.X. XXXXXXX & SONS, INC.
Acting on behalf of themselves and as the
Representatives of the other several
Underwriters named in Schedule 1 hereof.
By: PAINEWEBBER INCORPORATED
By: ________________________________________ Name: Title:
[SIGNATURE PAGES TO UNDERWRITING AGREEMENT]
SCHEDULE 1
Underwriters
Number of
Name of Underwriters Firm Units
-------------------- to be Purchased
---------------
PaineWebber Incorporated...................... 500,000
X.X. Xxxxxxx & Sons, Inc...................... 500,000
---------
Total......................................... 1,000,000
=========
1-1
SCHEDULE 2
Registration Rights of the General Partner or Its Affiliates
The Partnership is required
(1) to register for resale under the Act any units proposed to be sold by the
General Partner or its affiliates upon their request if an exemption from
the registration requirements is not otherwise available; and
(2) to register for resale under the Act the common units and senior
subordinated units issued to affiliates of Petro in the Transaction (as
defined in the Prospectus) upon their request if an exemption from the
registration requirements is not otherwise available.
The Partnership is obligated to pay all expenses incidental to the above
registrations, excluding underwriting discounts and commissions.
2-1
EXHIBIT A
STAR GAS PARTNERS, L.P.
PRICE DETERMINATION AGREEMENT
August 18, 1999
PAINEWEBBER INCORPORATED
X.X. XXXXXXX & SONS, INC.
As Representatives of the
several Underwriters named in Schedule 1 hereto
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Reference is made to the Underwriting Agreement, dated August 18, 1999 (the
"Underwriting Agreement"), among Star Gas Partners, L.P., a Delaware limited
partnership (the "Partnership"), Star Gas LLC, a Delaware limited liability
company, Star Gas Propane, L.P., a Delaware limited partnership, and Star/Petro
Inc., a Minnesota corporation, and the Underwriters named in Schedule 1 thereto
or hereto (the "Underwriters") for whom PaineWebber Incorporated and X.X.
Xxxxxxx & Sons, Inc. are acting as representatives (the "Representatives"). If
you are the only Underwriters named in Schedule 1, all references herein to the
Representatives shall be deemed to be to you as the Underwriters. The
Underwriting Agreement provides for the purchase by the Underwriters, subject to
the terms and conditions set forth therein, of an aggregate of 1,000,000 Common
Units representing limited partner interests in the Partnership (the "Firm
Units"). The Partnership has also agreed to grant to the Underwriters an option
(the "Option") to purchase up to an aggregate of 150,000 additional Common Units
(the "Option Units") on the terms and for the purposes set forth in the
Underwriting Agreement. The Firm Units and the Option Units are hereinafter
collectively referred to as the "Units." This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned agrees
with the Representatives as follows:
The public offering price per Unit shall be $_________.
The purchase price per Firm Unit to be paid by the several Underwriters
shall be $_________ representing an amount equal to the public offering price
set forth above, less $_____ per Unit.
A-1
The Partnership represents and warrants to each of the Underwriters that
the representations and warranties of the Partnership set forth in Section 3 of
the Underwriting Agreement are accurate, as though expressly made at and as of
the date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule 1 is a
completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of New York
without regard to the conflict of laws principles of such State.
If the foregoing is in accordance with your understanding of the agreement
among the Underwriters and the Partnership, please sign and return to the
Partnership a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Partnership in accordance with its
terms and the terms of the Underwriting Agreement.
Very truly yours,
STAR GAS PARTNERS, L.P.
By: STAR GAS LLC, as General Partner
By:
---------------------------------------------
Name:
Title:
A-2
Confirmed as of the datefirst above mentioned:
PAINEWEBBER INCORPORATED
X.X. XXXXXXX & SONS, INC.
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters named in Schedule 1 to the Underwriting
Agreement.
By: PAINEWEBBER INCORPORATED
By:
---------------------------
Name:
Title:
A-3
Number of
Name of Underwriters Firm Units
-------------------- to be Purchased
---------------
PaineWebber Incorporated...................... 500,000
X.X. Xxxxxxx & Sons, Inc...................... 500,000
---------
Total......................................... 1,000,000
=========
1-1
EXHIBIT B
SUBSIDIARIES
------------
Petro Holdings, Inc.
Petroleum Heat and Power Co., Inc.
Star Gas Propane, L.P.
Star/Petro, Inc.
Stellar Propane Service Corp.
B-1
EXHIBIT C
August __, 1999
PAINEWEBBER INCORPORATED
X.X. XXXXXXX & SONS, INC.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In consideration of the agreement of the several Underwriters, for which
PaineWebber Incorporated and X.X. Xxxxxxx & Sons, Inc. (the "Representatives")
intend to act as Representatives to underwrite a proposed public offering (the
"Offering") of 1,000,000 Common Units (the "Common Units") of Star Gas Partners,
L.P., a Delaware partnership (the "Partnership"), as contemplated by
registration statement (Registration No. 333-47295) on Form S-3 and registration
statement (Registration No. 333-______) on Form S-3, both of which were filed
with the Securities and Exchange Commission, the undersigned hereby agrees that
the undersigned will not, for a period of 120 days after the commencement of the
public offering of such units, without the prior written consent of PaineWebber
Incorporated directly or indirectly offer, pledge, sell, contract to sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
or require any person to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 to register any Common
Units or securities convertible into or exercisable or exchangeable for Common
Units or warrants or other rights to acquire Common Units of which the
undersigned is now, or may in the future become, the beneficial owner within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, other than in
the case of the Partnership the Option Units, (other than pursuant to employee
stock option plans as in existence on the date hereof or in connection with
other employee incentive compensation arrangements consistent with past
practice).
Very truly yours,
By:_________________________________________
Name:
Print Name: _______________________
C-1
EXHIBIT D
Form of Opinion of
Counsel to the Partnership
--------------------------
The Partnership is a partnership duly formed and validly existing and in
good standing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act and each of its Subsidiaries is a partnership duly
formed and validly existing and in good standing as a limited partnership under
the Delaware Revised Uniform Limited Partnership Act (or in the case of certain
Subsidiaries, a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation), and the
Partnership and each of its Subsidiaries have full power and authority to
conduct all the activities conducted by them, to own or lease all the assets
owned or leased by them and to conduct their respective businesses as described
in the Registration Statements and the Prospectus.
The General Partner has been duly formed and is validly existing in good
standing as a limited liability company under the laws of the State of Delaware,
with all necessary limited liability company power and authority to own or lease
its properties and conduct its business and to act as general partner of the
Partnership and the Operating Partnership. To our knowledge, all of the issued
and outstanding membership interests of the General Partner are owned free and
clear of all liens, encumbrances, security interests, equities, charges or
claims.
Petro and each of its subsidiaries has been duly organized and is validly
existing in good standing as a corporation under the laws of the jurisdiction of
incorporation, and has full power and authority to conduct all the activities
conducted by it, to own or lease all the assets owned or leased by it and to
conduct its business as described in the Registration Statements and the
Prospectus.
The Partnership, the General Partner and the Operating Partnership are each
duly qualified or registered as foreign limited partnerships, foreign limited
liability companies or foreign corporations, as the case may be, for the
transaction of business under the laws of the States of Connecticut, Indiana,
Illinois, Kentucky, Maine, Massachusetts, Michigan, New Hampshire, New Jersey,
New York, Ohio, Pennsylvania, Rhode Island and West Virginia; and to our
knowledge, such jurisdictions are the only jurisdictions in which the character
of the business conducted by the entity or the location of the properties owned
or leased by the entity make such qualification or registration necessary
(except where the failure to so qualify or register would not have a material
adverse effect on the condition (financial or other), results of operations or
business of the Star Gas Entities, taken as a whole, or subject the Partnership
or the limited partners of the Partnership to any material liability or
disability).
Stellar Propane Service Corp. is duly qualified or registered as a foreign
corporation for the transaction of business under the laws of the States of
Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, Pennsylvania, and
Rhode Island; and to our knowledge, such jurisdictions are the only
jurisdictions in which the character of the business conducted by it or the
location of the
D-2
properties owned or leased by it make such qualification or registration
necessary (except where the failure to so qualify or register would not have a
material adverse effect on the condition (financial or other), results of
operations or business of the Star Gas Entities, taken as a whole, or subject
the Partnership or the limited partners of the Partnership to any material
liability or disability).
Petro is duly qualified or registered as a foreign corporation for the
transaction of business under the laws of the States of New York, Massachusetts,
New Jersey, Connecticut, Pennsylvania, Rhode Island, Maryland, Virginia and
District of Columbia; and to our knowledge, such jurisdictions are the only
jurisdictions in which the character of the business conducted by it or the
location of the properties owned or leased by it make such qualification or
registration necessary (except where the failure to so qualify or register would
not have a material adverse effect on the condition (financial or other),
results of operations or business of the Star Gas Entities, taken as a whole, or
subject the Partnership or the limited partners of the Partnership to any
material liability or disability).
The General Partner owns its general partner interests in the Partnership
and the Operating Partnership free and clear of all liens, encumbrances,
security interests, charges or claims (i) in respect of which a financing
statement under the Uniform Commercial Code of the State of Delaware naming the
General Partner as a debtor is on file in the office of the Secretary of State
of the State of Delaware or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or arising under the
Delaware Act, the Bank Credit Facilities or the First Mortgage Note Agreement.
The Partnership owns its limited partner interest in the Operating
Partnership free and clear of all liens, encumbrances, security interests,
equities, charges or claims (i) in respect of which a financing statement under
the Uniform Commercial Code of the State of Delaware naming the Partnership as a
debtor is on file in the offices of the Secretary of State of the State of
Delaware or (ii) otherwise known to such counsel, without independent
investigation, other than those created by or arising under the Delaware Act,
the Bank Credit Facilities or the First Mortgage Note Agreement.
All of the outstanding Common Units have been, and the Units, when paid for
by the Underwriters in accordance with the terms of the Agreement, will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right, nor any restriction upon the voting or
transfer of such Units, under (i) the statutes, judicial and administrative
decisions, and the rules and regulations of the governmental agencies of the
State of Delaware, (ii) the Partnership's partnership agreement or (iii) any
instrument, document, contract or other agreement referred to in the
Registration Statements or any instrument, document, contract or agreement filed
as an exhibit to, or incorporated by reference in, the Registration Statements.
Except as described in the Registration Statements or the Prospectus, to our
knowledge, there is no commitment or arrangement to issue, and there are no
outstanding options, warrants or other rights calling for the issuance of, any
shares of capital stock or other capital interests of the Partnership or any
Subsidiary to any person or any security or other instrument that by its terms
is convertible into, exercisable for or exchangeable for capital interests of
the Partnership. The Partnership has all requisite partnership power and
authority to issue, sell and deliver the Units, in accordance with and
D-3
upon the terms and conditions set forth in this Agreement and in the
Registration Statements and the Prospectus. All corporate and partnership action
required to be taken by the Star Gas Entities and their shareholders for the
authorization, issuance, sale and delivery of the Units and the consummation of
the transactions contemplated by this Agreement has been validly taken.
No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Units by the Partnership, in connection with the execution, delivery and
performance of the Agreement by the Partnership and the General Partner or in
connection with the taking by the Partnership and the General Partner of any
action contemplated thereby, except such as have been obtained under the Act and
the Rules and Regulations and such as may be required under state securities or
"Blue Sky" laws or by the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Units to be sold by the
Partnership.
The description of the Common Units contained in the Prospectus is complete
and accurate in all material respects. The form of certificate used to evidence
the Common Units is in due and proper form and complies with all applicable
statutory requirements.
The Registration Statements, the Prospectus (including any documents
incorporated, at the time they were filed, by reference into the Prospectus) and
any further amendments and supplements thereto prior to the date hereof, comply
in all material respects as to form with the requirements of the Act, the
Exchange Act, the Exchange Act Rules and Regulations and the Rules and
Regulations (except that we express no opinion as to financial statements,
schedules and other financial data contained in the Registration Statements, the
Prospectus or incorporated by reference therein).
To our knowledge, any instrument, document, lease, license, contract or
other agreement (collectively, "Documents") required to be described or referred
to in the Registration Statements or the Prospectus has been properly described
or referred to therein and any Document required to be filed as an exhibit to
the Registration Statements has been filed as an exhibit thereto or has been
incorporated as an exhibit by reference in the Registration Statements; and no
default exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any Document filed or required to
be filed as an exhibit to the Registration Statements.
To our knowledge, except as disclosed in the Registration Statements or the
Prospectus, no person or entity has the right to require the registration under
the Act of Common Units or other securities of the Star Gas Entities by reason
of the filing or effectiveness of the Registration Statements.
To our knowledge, none of the Star Gas Entities is in violation of, or in
default with respect to, any law, rule, regulation, order, judgment or decree,
except as may be described in the Prospectus, or such as in the aggregate do not
now have and will not in the future have a material adverse effect upon the
operations, business or assets of the Star Gas Entities, taken as a whole.
D-4
All descriptions in the Prospectus of statutes, regulations or legal or
governmental proceedings are accurate in all material respects and fairly
present the information required to be shown.
The Partnership and the General Partner have full power and authority to
enter into the Agreement, and the Agreement has been duly authorized, executed
and delivered by the Partnership and the General Partner, is a valid and binding
agreement of the Partnership and the General Partner and, except for the
indemnification and contribution provisions thereof, as to which we express no
opinion, is enforceable against the Partnership and the General Partner in
accordance with the terms thereof.
The Partnership Agreement has been duly authorized, executed and delivered
by the General Partner, is a valid and binding agreement of the General Partner
and is enforceable against the General Partner in accordance with the terms
thereof; the Operating Partnership Agreement has been duly authorized, executed
and delivered by the Partnership and the General Partner, is a valid and binding
agreement of the Partnership and the General Partner and is enforceable against
the Partnership and the General Partner in accordance with the terms thereof.
Neither the issuance and sale by the Partnership of the Units nor the
execution, delivery and performance of this Agreement will (i) violate any of
the provisions of the certificate of incorporation, bylaws, agreement of limited
partnership or other governing documents of any of the Star Gas Entities, (ii)
breach or result in a default under, cause the time for performance of any
obligation to be accelerated under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the assets of the Star Gas Entities
pursuant to the terms of (x) any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, capital lease or other evidence of
indebtedness of which we have knowledge, (y) any voting trust arrangement or any
contract or other agreement to which a Star Gas Entity is a party that restricts
the ability of such Star Gas Entity to issue securities and of which we have
knowledge or (z) any Document filed as an exhibit to, or incorporated as an
exhibit by reference in, the Registration Statements, (iii) breach or otherwise
violate any existing obligation of any of the Star Gas Entities under any court
or administrative order, judgment or decree of which we have knowledge or (iv)
violate applicable provisions of any statute or regulation in any of the states
of the Star Gas Entities= formation, and any state in which such entities have
material operations, or of the United States.
The Underwriters will acquire the Units free and clear of any liens,
encumbrances, security interests, charges or claims (i) in respect of which a
financing statement under the Uniform Commercial Code of the State of Delaware
naming the General Partner, the Partnership or the Operating Partnership is on
file in the office of the Secretary of State of the State of Delaware or (ii)
otherwise known to us, without independent investigation, except as created by
this Agreement or by the Underwriters for any person who acquires an interest in
the Units through the Underwriters or as provided by the Delaware Act.
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Delivery of certificates for the Units will transfer valid and marketable
title thereto to each Underwriter that has purchased such Units in good faith
and without notice of any adverse claim with respect thereto.
Except as described in the Prospectus, to our knowledge, each of the Star
Gas Entities has (i) all governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, (ii) complied in all respects with all laws,
regulations and orders applicable to it or its business, except where the
failure to so comply would not have a material adverse affect on the Star Gas
Entities, taken as a whole, and (iii) performed all its obligations required to
be performed by it, and is not in default, under any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its property
is bound or affected. None of the Star Gas Entities is in violation of any
provision of its Partnership Agreement or certificate of incorporation or by-
laws, as the case may be.
The statements in the Registration Statements or the Prospectus under the
captions, "Cash Distribution Policy," "Description of the Common Units," and
"Federal Income Tax Considerations" insofar as they constitute descriptions of
the Partnership Agreements or refer to statements of law or legal conclusions,
are accurate and complete in all material respects.
None of the Star Gas Entities is (a) an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended or (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" thereof, within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
The Units have been duly authorized for listing by the NYSE upon official
notice of issuance.
We hereby confirm to you that we have been advised by the Commission that
the Registration Statements have become effective under the Act and that no
order suspending the effectiveness of the Registration Statements has been
issued and no proceeding for that purpose has been instituted or is pending,
threatened or contemplated.
We hereby further confirm to you that, to our knowledge, there are no
actions, suits, proceedings or investigations pending or overtly threatened in
writing against the Star Gas Entities, or any of their respective officers or
directors in their capacities as such, before or by any court, governmental
agency or arbitrator which (i) seek to challenge the legality or enforceability
of the Agreement, (ii) seek to challenge the legality or enforceability of any
of the Documents filed, or required to be filed, as exhibits to the Registration
Statements, (iii) seek damages or other remedies with respect to any of the
Documents filed, or required to be filed, as exhibits to the Registration
Statements, (iv) except as set forth in or contemplated by the Registration
Statements or the Prospectus, seek money damages or seek to impose criminal
penalties upon the Star Gas Entities or
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any of their respective officers or directors in their capacities as such and of
which we have knowledge or (v) seek to enjoin any of the business activities of
the Star Gas Entities or the transactions described in the Prospectus and of
which we have knowledge.
We have participated in the preparation of the Registration Statements and
the Prospectus and, without assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statements, the Prospectus or in any amendment or supplement thereto or in any
documents incorporated by reference into the Prospectus, nothing has come to our
attention that causes us to believe that, both as of the Effective Dates and as
of the First Delivery Date [and the Second Delivery Date], the Registration
Statements or any amendment thereto contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that any Prospectus or any amendment or supplement thereto, including any
documents incorporated by reference into the Prospectus, at the time such
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued, at the First Delivery Date [and the Second Delivery Date], contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances in which they were made, not misleading (except that we
express no opinion as to financial statements, schedules and other financial
data contained in the Registration Statements, the Prospectus or incorporated by
reference therein).
This letter is furnished by us solely for your benefit in connection with
the transactions referred to in the Agreement and may not be circulated to, or
relied upon by, any other person, except that this letter may be relied upon by
your counsel in connection with the opinion letter to be delivered to you
pursuant to Section 7(f) of the Agreement.
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